“Amazon’s share in taxable states appears to be slightly HIGHER than in those
without, suggesting sales tax does not determine market share. TraQline data
suggest that Amazon’s $ share is 10bps higher in states where it collects sales tax,
implying that brick-and-mortar retailers cannot hope for sustained significant share
reversal if Amazon collects taxes. Our survey of 380 retail exec in February found that
only 9% believe AMZN’s success was mainly “a tax avoidance scheme.”

ISI Group – Amazon Sales Tax impact – September 9,2011

Come see as TraQline Speaks at CES 2012 – The State of Tech Retailing

Fee: Free

Date: Monday, January 9
3:00 pm – 4:00 pm

Location: N250

Speakers: Eric Voyer- TraQline, Adam Levin – Levin Consulting, Joseph Feldman – TAG

Description:

Consumer tech retailing has undergone tremendous changes over the last three years. The growing strength of online sales, consumers’ ability to price-compare and shop on mobile devices, and ever-shifting category leadership are having a huge strategic impact. A panel of today’s brightest retail analysts reveals what’s ahead.

Track:
CEA Research Summit at International CES

http://ces12.mapyourshow.com/5_0/sessions/sessiondetails.cfm?ScheduledSessionID=1DAACFC3

Jefferies Lifts Target on Home Depot (HD) to $34; Likes FCF, But P/E May Be Capped Near Term

Jefferies boosted its price target on The Home Depot (NYSE: HD) from $33 to $34 following third-quarter results. The firm maintained its Buy rating on the stock.

Home Depot reported third-quarter earnings of 60 cents per share, which was 2 cents stronger than Jefferies and the Street’s view. Amid the strong results, Home Depot management only raised its 2011 sales outlook and left earnings alone.

On the numbers, Jefferies commented, “Don’t expect increased leverage to buy stock, but FCF is robust to keep buybacks going strong. Shares are trading toward the upper end of what we view as a fair value range, based on our discounted cash flow analysis.”

For 2012, Jefferies is increasing EPS estimates from $2.29 to $2.38, and for 2013, earnings move from $2.36 to $2.50 per share.

Finally, the firm said, “we think the P/E multiple is likely capped near-term given modest share loss according to government and TraQline numbers recently, an emerging online competitive threat and a weak macro backdrop marked by deterioration in the Architectural Billings Index, remodeling indexes and Banks’ Willingness to Lend Index.”

For an analyst ratings summary and ratings history on Home Depot click here. For more ratings news on Home Depot click here.

Shares of Home Depot closed at $38.07 yesterday, with a 52 week range of $28.13-$39.38.

Sears Holdings Corp. is turning to its house of brands to buttress its shrinking retail operation as the money-losing retailer struggles to stem a five-year sales decline.

The DieHard, Craftsman and Kenmore brands have been around almost as long as Sears, and now they’re being pushed to the fore. Deals are in place to sell DieHard and Craftsman through other retailers, while executives have begun to look at ways to make money from the Kenmore brand without damaging Sears’ core appliance business.

The Hoffman Estates-based operator of Sears and Kmart is looking to hire an outside licensing agency to put Sears’ proprietary brand names on products it doesn’t already sell. A request for bids began circulating to interested parties in August, according to a source familiar with the process.

At the same time, Sears has considered selling ancillary Kenmore appliance products, such as vacuums and humidifiers, through Costco Wholesale Corp., as well as putting the Kenmore name on products it doesn’t already sell, such as wind turbines and solar panels, according to another source familiar with the plans.

Any agreement, either to sell Kenmore products or license the name, would mark the first time in Kenmore’s 84-year-history that a retailer other than Sears or Kmart would carry the famous appliance brand.

“These are great brands that really are the jewels in the crown in Sears,” said Michael Stone, CEO of the Beanstalk Group, a New York-based brand licensing agency owned by Omnicom Group. “Most retailers would kill to have brands like that to bring people into the stores. Maybe someday these brands will be all that is left of Sears.”

The prospect of Kenmore appearing on Costco shelves, or elsewhere, follows a flurry of groundbreaking deals in the past two months — one in August to sell Craftsman tools at Costco and another in September to sell DieHard car batteries to Meijer. In the months leading up to Labor Day, Sears also expanded a pilot, started last year, to sell Craftsman tools at Ace Hardware stores.

The steps to sell Sears’ proprietary brands to rival retailers — 1,624 individual stores so far — comes as Sears is inviting rival retailers into its own stores. Sears is marketing its entire real estate portfolio online at SHCRealty.com, as the Tribune first reported last year.

The company is seeking outsiders to lease space inside about 3,700 stores and auto centers. Another 61 shuttered stores are for sale or lease.

“It’s far more lucrative for Sears to sell the brands in Sears stores, but getting the traffic is the challenge,” said John Gerzema, executive chairman of BrandAsset Consulting in New York. “It’s like their own stores are becoming mini shopping malls while they’re getting their famous brands outside the stores. It’s a really interesting experiment.”

Sears executives have bandied about the idea of selling Sears’ in-house DieHard, Craftsman and Kenmore brands outside of the company for decades; they never followed through with the proposition for fear it would hurt traffic at Sears stores. But times have changed.

Sears, once America’s biggest retailer, has been losing market share for years to Wal-Mart, Target, Home Depot, Lowe’s and Kohl’s, among others. And this year, as many retailers have bounced back from the Great Recession, Sears is still struggling.

Sears lost money in its first two quarters of this year, reflecting falling sales and markdowns. Its cash on hand fell to $658 million in the quarter ended July 30 from $1.2 billion a year earlier. Total borrowings rose to $3.6 billion in the quarter from $3.2 billion from the same period last year.

Sears’ position as the nation’s biggest seller of appliances (Kenmore and other brands combined) has also eroded over the past decade as big-box home improvement stores populated the landscape.

Sears stores held a 30.4 percent share of the appliance retail market for the year ended Sept. 30, based on revenue sales, according to Louisville, Ky.-based Stevenson TraQline’s quarterly market survey, released Friday. That figure is down from the four previous years. At its peak Sears’ share was about 40 percent.

A recent Consumer Reports report found that as a major appliance retailer, Sears stores rank near the bottom of the pack, but it’s a different story for the brands. They rate highly in both Consumer Report lab tests and reader surveys.

The Kenmore Intuition is the consumer publication’s top-rated vacuum. And it recommends a wide range of Kenmore and Craftsman products, including six refrigerators, four dishwashers, three ranges, eight dryers, five washing machines, four gas grills, five lawn mowers, two cordless drills, one leaf blower and one snowblower.

Sears is saying little about its plans for its brands. The company declined to make an executive available to discuss its brand strategy.

But more than a few of you know what I’m getting at.

Amazingly this year’s Top 100 CE Retailers rankings, which track the prior year’s annual sales, show that about two and a half years into the “new normal” economy CE sales grew 5.8 percent at retail during 2010.

More than a few of you – retailers, manufacturers and distributors – have to be scratching your collective heads saying, “How can that be possible? Our business was ‘X’ last year? How can it be in a year that Bernie’s, Ken Crane’s, GameCrazy, MeyerEmco, not to mention Flanner’s and most recently Ultimate Electronics have bitten the dust?”

No, believe me, I am not second-guessing the great work that Bob Tancula and his team at Stevenson, or our own Alan Wolf, or even yours truly did in gathering and vetting this list. Remember every year our Top 100 measures the entire CE retail industry, not just the usual suspects.

The industry has changed, once again, to no one’s surprise. But the new products that were ascendant in 2010 and continue to be are smartphones and iPads. What’s different about the industry’s technological changeover this time as compared to many others we have seen is that more new suppliers have come in to dominate, vs. traditional brands.

The same thing is true on the retail side. Barnes & Noble, on the strength of its Nook e-reader, in the words of Alan Wolf  “blasted its way onto the rankings,” at No. 66. But that’s nothing compared to the new No. 4 on our list, Amazon. com, with a 72 percent increase in sales that now has both Walmart and Best Buy looking over its shoulders.

And of course the company from Cupertino, Calif. that seems to be an industry inside of an industry. It had a 26 percent gain in CE sales based on the popularity of iPad, iPhone, iPod Touch, etc., making it the No. 3 retailer in our Top 100.

Since International CES in January, almost starting with our annual retail roundtable in Las Vegas (which appeared in our Feb. 21 issue), in just about any discussion TWICE has had with industry leaders, some lament at the state of the industry. Others have said – and shown with their actions – that companies have to embrace this change to survive and thrive.

You can’t do anything about macro-economic trends, or the rising price of gasoline and other commodities, and you can’t do much about unemployment. (Although hhgregg is doing a helluva job on its own, hiring plenty in its expansion drive, isn’t it?) Here’s a reminder about the nature of this industry from CE Hall of Famer Joe Clayton, who was just hired as DISH Network’s president/CEO (see p. 4). He told TWICE last week, “Technology always changes the landscape so that is nothing new… But for the consumer we have to provide better value, enhanced services … really adding additional services to the equation. I see these technology changes … as an evolution.”

Amen.

http://www.twice.com/article/468591-Numbers_Can_Be_Deceiving.php

The company revealed a problem last December that has left investors scrambling for answers. Even with bankrupt Circuit City out of the picture, the retailer was losing market share, especially in the key television and computing categories. Best Buy shares have since tumbled 21% and now trade at a mere nine times this fiscal year’s consensus earnings.

Investors shouldn’t assume Best Buy simply needs time to recover. Rather, the threats it faces are likely only to worsen. Take Amazon.com, whose relentless growth has undercut the raison d’être of specialty retailers. That is true both in books—where Borders Group recently filed for bankruptcy protection—and in electronics.

Indeed, Amazon’s electronics and nonmedia revenue rose 66% to $18 billion last year, helping it lift market share in different segments. Its share of LCD TV sets, for instance, nearly tripled, to 3.7% at the end of 2010 from 1.3% in 2007, estimates research firm TraQline. Its share of portable audio devices rose to 11% from 4.6% in the same period.

A key to that success is that Amazon beats bricks-and-mortar retailers across the board on average electronics prices, a Wells Fargo study showed. Best Buy, on the other hand, traditionally hasn’t tried to compete on price alone but has preferred to highlight its tech-savvy staff and wider selection.

Its selection, at least, probably meant more a few years ago, when manufacturers like Sony sold products to Best Buy but not to nonspecialty retailers. But that has changed. Sony now sells to Costco Wholesale, for instance.

And it has become much easier for consumers to compare prices—ironically, using applications on the smartphones they can purchase in Best Buy. Shoppers can visit Best Buy stores to examine items before buying them elsewhere. Or, as Greg Melich of research firm ISI Group says, they are using Best Buy as Amazon’s “showroom.”

Best Buy’s market share is still so big—it accounts for nearly a third of U.S. consumer-electronics sales—it is reasonable to assume many Best Buy shoppers make decisions primarily based on price.

That helps explain why Best Buy is exploring a switch to consistently competitive prices rather than strategically timed sales.

But history suggests changes in pricing strategies can be problematic. David Schick of Stifel Nicolaus points out that BJ’s Wholesale Club decided to lower prices on some items in 2002 to defend market share. The result: Sales at stores open more than a year quickly improved. But gross margins fell for eight straight quarters. BJ’s shares also fell more than 70% from April 2002 to April 2003, when rival Costco’s fell just 20%. While BJ’s stock has recovered somewhat since then, it hasn’t caught up with Costco’s.

And reducing prices might mean Best Buy has to cut costs, such as for its sales staff. That leaves the question of what a specialty retailer still has to offer.

Best Buy’s edge has been apparent when shoppers wanted new technologies like LED TVs, which it sold with more success than rivals. But high hopes for 3-D television have faded, and there is nothing promising on the immediate horizon. Moreover, the major source of must-have electronics is Apple, whose own retail-store chain is increasingly a rival even as Best Buy stocks Apple products. Sales at Apple’s U.S. stores rose 83% to $2.8 billion in the fourth quarter of 2010, estimates Mr. Melich, making it the third-biggest electronics retailer in the U.S.

Unless a new technology takes hold, the worst of times are likely to come for Best Buy investors.

On January 28th, TraQline Canada and TraQline PRO were published!

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